Business Glossary

amount by which the factory overhead added to work-in-process inventory at a predetermined overhead rate (and credited to factory overhead applied) exceeds the actual overhead shown in factory overhead control.

rate, based on budgeted factory overhead cost and budgeted activity, that is established before a period begins.

Budgeted activity units used in the denominator of the formula, more often called the denominator level, are measured in direct labor-hours, machine-hours, direct labor costs, or production units.